• Disarmed

    by  • December 10, 2008 • patent

    Han Nee invented, and patented, the use of various silver alloys to be used in reflective and semi-reflective layers of CDs and DVDs. He may have done it while employed for Sony DADC US Inc. (“DADC”) and Sony, Inc. (“Sony”), a company related to DADC somehow. Nee had worked for both companies at different points of time and different events occurred while he was at the different companies. Whether Nee was covered by the employment agreements, whether he invented what he patented while employed by the Sony companies, and whether continuation patents were for only minor improvements are all facts in dispute, but the court did decide when one may or may not rely on the statute of limitations to defeat an ownership claim.

    Nee signed two employment agreements (one with DADC, one with Sony) that provided for the automatic assignments of any patent rights invented during his employment. At the very end of his employment with DADC he sent a patent disclosure to a patent attorney. In the following years he filed the original application and a number of continuation and CIP applications.

    The following is the court’s explanation of the procedural posture: “In 2004, [Nee’s company] Target sued the Williams Defendants for infringement of Patent No. 6,790,503 (the “‘503 Patent”). Sony and the Williams Defendants contend that the ‘503 Patent is related to the [original] ‘889 Patent. The Williams Defendants raised Sony’s ownership as a defense to the infringement suit. Williams and Sony also entered a “joint defense agreement,” where DADC granted Williams a license under the ‘889 Patent in consideration for Williams’ good-faith efforts to establish that Sony owns the ‘889 Patent. . . . Subsequently, Nee sued Sony for infringement in Indiana. On April 26, 2007, DADC moved to intervene in this action, claiming, inter alia, that it owned the ‘889 Patent based on the January 1992 Agreement. Subsequently Nee counterclaimed against Sony Corp. and [another Sony entity]. The two were then designated as plaintiffs in intervention.”

    Nee moved for summary judgment that a Sony parties’ affirmative claim of ownership was barred by the statute of limitations. Sony responded that there was no statute of limitations on its ownership claim. In DDB Tech., LLC v. MLB Advanced Media, LP, 517 F.3d 1284 (Fed. Cir. 2008), the Court of Appeals for the Federal Circuit held, in this same type of licensing arrangement, i.e., where an accused infringer licenses strategically from a potential co-owner after suit is filed, that MLB Advanced Media could raise a defense based on the absence of subject matter jurisdiction because not all owners of the patent were plaintiffs. Id. at 1287. Notably in the DDB case, under Texas state law the statute of limitations defense was unavailable.

    Here, though, Sony was making an affirmative claim of ownership rather than asserting a defense. The court held that the statute of limitations would apply to the claim, since it is well-established that the statute of limitations is only a shield, not a sword. Whether the statute of limitations had run was a question of fact the court would not decide on summary judgment, however, because Sony alleged Nee fraudulently concealed his patent ownership, which would toll the statute of limitations.

    Although not specifically mentioned by the court, presumably the Williams Defendants’ licensing defense will remain, even though the same issue – whether either Sony or DADC are the actual owners of the patents – in an affirmative posture may be defeated by the statute of limitations. Where does it go from here? Nee had brought a declaratory judgment claim of ownership, but there’s no mention of the status of that claim – presumably it rises and falls with Sony’s claim. But can the Williams Defendants have a license to patents from Sony when Sony does not have vested ownership rights? Will Sony have an equitable ownership but just not a legal one? Will Nee be able to enforce his patents against other parties? Can Sony just grant similar licenses in future cases to immunize future defendants?

    Target Tech. Co. v. Williams Advanced Materials, Inc., No. SACV 04-1083 DOC (MLGx), 2008 U.S. Dist. LEXIS 97247 (C.D. Cal. Nov. 21, 2008)

    © 2008 Pamela Chestek